Powell just opened the door to judge cuts. Don't come before Him.

Copyright © HT Digital Streams Limit all rights reserved. Nicole Goodkind, Barrons 3 min read 24 Aug 2025, 12:31 pm Ist Jerome Powell met with (from left to right) on Friday the Boe’s Andrew Bailey, ECB’s Christine Lagarde, and the Bank of Japan’s Kazuo Ueda. (AP) Summary The Fed could cut in September, but that does not mean the beginning of another relief cycle. Moran, Wyo. – On a resort with a view of the Teton Mountain Range, Jerome Powell and a worldly collection of economists and central bankers spend a sunny weekend on monetary policy. The Kansas City Federal Reserve presents its economic symposium in Jackson Hole every August. What started in 1982 as a lure to get the then chairman Paul Volcker from the West became one of the most viewed meetings of the central bank at least for those known. Within the taxidermy-and-tweed lodge, as soon as the stomping terrain of the Rockefellers, the heads of the central bank, mixed under the knee cameras on Friday morning, while tourists looked in the best of RI, confusing by the scene. Moments earlier, during his final speech on the Confab, Powell gave markets just what they wanted: a signal that the Fed could lower the rates. But he didn’t give them much anymore. Instead, he used the opportunity to raise concerns about the labor market, which is also the theme of this year’s conference. Powell said that with the policy in a restrictive area, the shifting balance of risks “makes it possible to adjust our policy status.” It was not a promise, but it was close enough for markets to seize. Traders increased their bets on a rate hike in September, with almost 86% chance of a quarter cut, according to the CME Fedwatch Tool. The Dow Jones Industrial Average rose until its first record of the year, while the mortgage returns fell. Furthermore, Powell was vague. He emphasized that monetary policy was “not on a predetermined course” and the right debate – how many tracks and how fast – left for another day. However, his concern about employment was before and in the middle. Powell described the labor market as in a ‘strange kind of balance’, with the demand and supply both fading at the same time. The July payroll report showed that working profit over the past three months has delayed an average rate of 35,000 per month, lower than 168,000 per month during 2024. And if they continue to realize, “they can do so quickly in the form of sharp higher discharge,” he said. This puts a lot of weight on the data between now and the Fed’s September meeting, starts with the August work report. A poor pressure can further justify a September cut and push the Fed into a deeper lighting cycle. A stronger number gives Powell more covering to move slowly. Powell still believes that the Fed has the flexibility to wait. He noted that the Fed’s interest rate ‘was now 100 basis points closer to neutral than it was a year ago’, which implies that monetary policy is less restrictive and that there is therefore not so much urgency to cut quickly. The Fed may not have to cut so deeply either. Powell said the so-called R-star, the theoretical interest rate that enables the economy to grow with a stable inflation at full potential, could now be higher than in the 2010s. “We cannot say with certainty where rates will be in the long run, but their neutral level may now be higher,” he said, referring to productivity, demographics and fiscal policy. In practice, this means that even after two or three rate cuts, monetary policy can still be in a limiting area. There is also the other side of the Fed’s double mandate, inflation. Powell expressed concern that President Donald Trump’s tariff policy will continue to raise prices for the coming months, making the decision of the central bank more difficult. For markets that dream of a quick return to easy money, Powell has quietly indicated the contrary. In other words, the Fed could cut in September, but that doesn’t necessarily mean the beginning of another relief cycle. The Fed’s summary of economic projections, which are due next month, will show whether the committee agrees – and how many cuts they envisage for the rest of the year. Write to Nicole Goodkind on [email protected], catch all the business news, market news, news reports and latest news updates on live currency. Download the Mint News app to get daily market updates. More Topics #federale Reserve #Monetary Policy #jerome Powell #Jackson Gat Read Next Story